The research literature on the economic development of East Asia and Taiwan has been dominated by two major theories concerning the analysis of markets: development theory, a concept from political economy, and a vision involving primordial social networks that emphasizes ‘familism’. East Asian developmental state theory stresses the crucial role of the state in integrating and managing market forces to bring about successful economic development (Johnson 1982; Amsden 1985; Wade 1990; Evans 1995). The school of thought that takes Chinese ‘familism’ as the core factor in explaining economic growth downplays the importance of state power, while emphasizing social and cultural causes of East Asia’s rapid economic growth (Hamilton and Biggart 1988). The prevalence of family businesses in Taiwan has been documented by scholars from different academic disciplines, and the prominence of family firms in the market has marked Taiwan as a typical case of family capitalism (Hamilton 1997). Although different schools of thought attribute Taiwan’s economic development to the intervention of the state on the one hand, and to corporate networks on the other, few people have attempted to either integrate or compare the effectiveness of these two different perspectives. This raises a thought-provoking question. If markets, as current scholars indicate, are dominated by the social-structural mechanisms of networks, then, in a market in which state power intervenes heavily, how does state power interact with these social mechanisms? This is clearly a question that the existing literature does not answer in any great detail.